The Challenges of Efficient Stowage Execution

‍

THE SITUATION TODAY

‍

Today terminal operators and ocean carriers exist in an environment that is highly competitive, requires an enormous amount of capital to remain relevant and, for most participants, produces minimal and inconsistent profitability. Ocean carriers and terminal operators face a formidable challenge planning and executing the most fundamental of shipping processes: stowage. While both participants in the process are highly skilled with deep experience and extensive domain knowledge, the process itself, as it is defined and practiced today, is its own constraint. Based on a 30+ year old model, this age old process simply cannot address the new requirements for increased efficiency and productivity. The current process is not collaborative, provides limited visibility at best, and fosters processes based on hard deadlines that are often unrealistic, followed by reactive behavior that is often counterproductive. True collaboration, transparency and, most importantly, trust between ocean carriers and terminal operators are lacking.

‍

To some extent, the current stowage planning and execution process does in fact work. Millions of containers are moved each year around the globe at a cost to consumers that is, in most cases, negligible. So why does anything need to change? The challenge is that the size and scale of the industry has reached such enormous proportions that the constraints inherent in the existing stowage planning and execution process are a key inhibitor in the realization of a suitable return on investment for ships and terminals. In an industry where large long term investments have been made and are not reversible, how can the situation be turned around into one where investments are suitably rewarded?

‍

‍

A Lack of Collaboration

‍

The key to turning around the situation is simple and within the grasp of all ocean carriers and terminal operators. The lack of trust and true collaboration between ocean carriers and terminals are critical barriers that must be overcome to attain the required productivity increases. In most instances, ocean carrier stowage planning personnel are explicit in their desire that terminal operators follow the stowage plan as presented to them, typically the day prior to vessel operations.

‍

Equally, the terminal operator receives the stowage plan and, knowing the facts on the ground about the berth, terminal and vessel details, often won’t work directly with the stowage planners on obvious issues with the plan. Rather, the terminal operator will do the best job possible as it understands the situation and will agree on the final stowage details directly with the vessel’s chief.

‍

In both cases, collaboration is limited at best and often nonexistent. The key participants don’t even think they can truly influence the other party. This thinking must change. Both parties can be proactive and work directly with the other to identify issues and resolve them in a collaborative manner that increases productivity.

‍

Ocean carriers and terminal operators share the same goals: Get the ship in, worked quickly, safely and productively, and then back underway. Ocean carriers and terminal operators want to maximize the utilization of their assets to operate profitably. The relationship should be characterized by common goals and close communication, but in today’s day-to-day world of ship operations, has developed into one that is reactive and confrontational. Strict processes, deadlines and artifacts are used as ways for each party to gain leverage over the other. The lack of visibility throughout the process has come to define this relationship.

‍

‍

Breaking the Status Quo

‍

It’s often helpful to examine outliers to understand how things can be fundamentally different and provide dramatically different results. Two examples that illuminate what is possible for the future of stowage planning are the Maersk-APM Terminals Hub Partnership and the OOCL-DP World Southampton collaboration.

‍

These partnerships achieve the same goals in different ways, but both are characterized by an exceptional degree of communication, collaboration and, most importantly, success.

‍

The Maersk-APMT Hub Partnership is based on terminal operator personnel being co-located with ocean carrier stowage personnel in the same office, working side-by-side in dedicated terminals that for the most part are dedicated exclusively to Maersk ships. The personnel communicate and collaborate during the end-to-end operations of the ship. The dramatic decrease in port stays, increase in berth and crane productivity and the enablement of the vessels to continue slow-steaming and super-slow-steaming is well-documented.

‍

It’s also important to understand the increase in terminal throughput and utilization. Maersk and APMT have benefited dramatically from the Hub Partnership, and this model has been expanded to cover Algeciras and Rotterdam. The impact on their financial results also has been noted in the press.

‍

Although the Hub Partnership is a compelling example of how things can be and the positive benefits that result, one can question if any ocean carrier other than Maersk can undertake implementing such an organizational and operational structure. This is where the OOCL-DP World Southampton cooperation provides context to better understand how the rest of the industry might be able to collaborate using a more scalable model appropriate to the size of the rest of the industry.

‍

The OOCL and DP World Southampton collaboration resulted from a shared desire for increased berth productivity and reduced port stays. OOCL and DP World were frustrated by previous efforts to achieve their goals with limited success. Both had concluded that attempting to achieve their goals with the existing relationship and processes wouldn’t lead to a breakthrough and decided to embark on an initiative to fundamentally change how they worked with one another.

‍

The unusual aspect of this initiative is the extent of the collaboration. DP World terminal personnel interact consistently with OOCL stowage personnel in Shanghai throughout the vessel-planning process. Critically, the collaboration extends beyond the stowage plan for ships calling at Southampton, but to the port prior to the Southampton call, usually the last port of call in China. In this way, DP World can suggest stowage options to make the Southampton call more productive prior to the vessel’s loading being completed in the previous port of call.

‍

Although there is much more to the collaboration than this simple aspect, this key step indicates how both worked to fundamentally change the existing process by communication and collaborating to circumvent the usual bottlenecks.

‍

In both examples, the solution that delivered increased efficiency and productivity consisted of more than simply purchasing additional hardware or building more infrastructure.

‍

The infrastructure, hardware and cooperative labor, of course, must be in place to increase productivity. But as productivity has stagnated in much of the world for the last decade, it’s clear hardware alone isn’t the solution. The keys to success are communication, visibility and collaboration.

‍

‍

The Future Without Change

‍

What does the future hold for those who don’t re-examine their existing process for stowage planning and control? More of the same. No change in berth productivity, no decrease in port stays, no increase in slow-steaming. Currently, when a ship is late, missing the start of its pro forma berthing window, the knock-on effects are dramatic in most terminals.

‍

It’s worth noting that the on-time performance of the container industry for the most recent quarter was 73 percent, meaning about one in four ships is late. When this happens, one of the first challenges for the terminal is where to berth the vessel — in the originally planned berth that is the basis for the pro forma, or another berth to enable ships arriving on time to use their designated pro forma berth and cranes as planned? From here, the challenges mount:

‍

Are the appropriate number of cranes and gangs available given the new working schedule?

Will crane intensity and crane productivity match what was planned for the ship?

How will the terminal yard configuration and operations be impacted by the delay if there is unplanned vessel overlap?

‍

The ocean carrier and terminal operator are now in a situation where they struggle to determine the optimal way to efficiently use the terminal to work the ship.

‍

Without exceptional communication, visibility and collaboration, the common result is a drop in productivity and the inevitable post-call blame-game as parties struggle to explain what happened, why and who should pay.

‍

In these situations, the concept of a new way to collaborate is even more appealing, especially for those willing to take control and make the required process changes.

‍

‍

A New Way

‍

How can the future be different? Suppose terminal operators could see stowage plans prior to departure of the ship from the previous port of call? Suppose ocean carriers were open to suggestions from terminal operators about how to stow the ship to improve productively and minimize port stays? What if ocean carriers could collaborate in real time with terminal operators, agents and other stakeholders involved in stowage planning and execution? What if terminal operators and ocean carriers could work together proactively to identify opportunities to maximize vessel and terminal utilization?

‍

The net result would be better-utilized ships, more productive terminal operations and improved results for all involved. More clarity and communication would eliminate much of the frustration and conflict built into the current constrained process.

‍

The stowage planning and execution process is complex, has many variables and is impacted directly by a variety of forces that are difficult to forecast and control for any given ship. The current process is predicated on both stakeholders following a pro forma, updated plans and implementation of rigid process that reflects the opposite of what is really happening. In this dynamic environment, the process itself strains the relationship between the ocean carrier and terminal operator. Over the long term, the result is that a basic lack of trust evolves that is a defining part of the working relationship.

‍

The way forward is very different. It’s based on the understanding that in an environment of more frequent service changes, bigger vessels, bigger terminals and ever more strident demands for increased efficiency, the existing process must change.

‍

The new process leverages modern cloud-based technology that connects, provides visibility and delivers tools that reduce constraints, enabling real-time collaboration. The visibility isn’t just for information, but is actionable and can make a difference in day-to-day operations.

‍

The new process is flexible and inclusive by allowing more, rather than fewer, participants to collaborate in a secure and structured manner. The new process enables all parties to trust each other by objectively verifying one another’s performance and actions with clear KPIs, metrics and business intelligence tools available to all.

Did you know

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.